Buy These 2 Dividend Stocks in July
💡 Key Takeaway
July is historically strong for stocks, and ITW and DE offer compelling dividend growth opportunities with catalysts for price appreciation.
Why July Is the Time to Buy
The article argues that July is the strongest month for stocks, citing a Carson Group report showing the S&P 500 rose 2.3% on average over 20 years. Additionally, the year following midterms historically delivers 14% gains, as per RBC Wealth Management.
The author highlights two dividend-growth stocks: Illinois Tool Works (ITW) and Deere & Company (DE). ITW is a diversified industrial conglomerate that analysts largely ignore, with only two buy ratings. Yet it boasts strong margins (25.4% operating margin), 5% revenue growth, 12% EPS growth, and a raised guidance.
Deere is a major agricultural and construction equipment maker. Its construction segment is booming, with forecasted 20% sales growth in 2026. The agricultural segment is at a cyclical bottom, with corn and wheat prices firming, suggesting a turnaround.
Both companies have strong dividend growth histories. ITW has nearly tripled its dividend in a decade, and Deere has a low payout ratio (47% of free cash flow), supporting future increases. The author expects fuel costs to decline and inflation to ease, benefiting both.
Why These Stocks Matter for Investors
ITW and DE represent contrarian opportunities. ITW's neglect by Wall Street sets the stage for positive surprises that can lift the stock as analysts upgrade. Its consistent dividend growth and share buybacks enhance shareholder returns.
Deere sits at a sweet spot: its construction business benefits from infrastructure spending and data center builds, while its ag segment is poised for recovery. Lower fuel and fertilizer costs should ease farmer finances, boosting demand for Deere's equipment.
Both stocks offer defensive income with growth potential. ITW yields 2.4% but has a history of double-digit dividend increases. Deere's yield is similar but with strong dividend growth prospects. In a volatile market, these stable dividends provide a cushion while the companies benefit from macroeconomic tailwinds.
Source: Investing.com
Analysis generated by Bobby AI quantitative model, reviewed and edited by our research team. This is not financial advice. Always do your own research before making investment decisions.
Bobby Insight
Both ITW and DE are strong buys for dividend growth and capital appreciation in the current environment.
The historical strength of July and the midterm year cycle provide a favorable backdrop. ITW's hidden strength and Deere's cyclical recovery are underappreciated by the market, offering entry points before analysts catch on. Risks include economic downturn or prolonged high interest rates, but the defensive dividends and strong business models mitigate these.
What This Means for Me
